Wall Street Bets on the Wrong Horse, US Fed will Pause Interest Rate Hikes in May unless Inflation Unexpectedly Soars, Chief Economist Says

SHANGHAI, Apr 12 (SMM) - Paul McCulley, former chief economist at PIMCO, believes that Wall Street is wrong about the direction of the Fed's interest rates.

Barring an unexpected spike in inflation, mounting economic pressures will convince the Fed to stop raising interest rates next month. That's at odds with recent estimates from the CME FedWatch, which forecast a nearly 70 percent chance of a 25-basis-point hike in May.

 But McCulley believes markets will expect a pause in the rate hike in the next week or two, given deteriorating economic data and worrisome activity in the U.S. Treasury market.